If you missed our March 17 virtual Happy Hour (VHH), you missed news from Scottsdale Director of Transportation Mark Melnychenko and this Market Update from Fletcher Wilcox. Our next VHH is April 14, 2021; more info here and registration here.
An extremely low supply of residential homes for sale, combined with an enormous oversupply of buyers, is driving many consumers to make contract concessions with the hope of increasing the odds that their offer will be accepted by a seller.
This year is even more competitive for buyers than last year. According to data compiled from ARMLS, the number of sellers listing single-family homes during the first two months of 2021 is down 11 percent compared to last year.
Greater Phoenix Monthly Listings | Single-Family Resale Homes
On the other hand, sales for the first two months of 2021 are up 6 percent over last year.
Greater Phoenix Monthly Sales | Single-Family Resale Homes
To compete against cash offers, some buyers who need a loan to purchase are waiving loan and appraisal contingencies found in the Arizona REALTORS® Residential Resale Real Estate Contract.
Some buyers are agreeing that the seller does not need to make any repairs and others are foregoing an inspection with language like “inspection period will be zero days.”
Some buyers are making their earnest money non-refundable by agreeing to terms like “if buyer cannot close the transaction for any reason, buyer forfeits earnest money to seller” or “earnest money is non-refundable after contract acceptance.”
Often, emotions take over when writing an offer. But an agent should have a serious talk with all buyers as to the consequences of removing contingencies, waiving the inspection period, and/or making earnest money non-refundable.
What if during the transaction the buyer discovers they don’t like something about the property and wants out? What if the buyer made the earnest money non-refundable and now has a change in employment and cannot close?
Agents should ask their brokers about asking buyers to acknowledge such risks in writing.
Fletcher Wilcox is VP of Business Development at Grand Canyon Title Agency. He is affiliate director at the Scottsdale Area Association of REALTORS® and has served on subcommittees for the Arizona REALTORS®.